CRYPTOACADEMY SEASON 3 WEEK 1- HOMEWORK POST FOR PROF @lenonmc21: What is cryptocurrency Trading and on what platforms can we do it. By @ebuahsang1
Define in your own words what trading is, what its function is, and how it relates to the cryptocurrency market.
Trading has different definition to different entities as suits their mission or objectives.
To me, Trading is the action or activity of buying and selling of goods and services.
From the definition above, it can be seen that trading has three important component
- The activity of buying and selling.
- The persons or parties involve (buyer and seller).
- And the product being traded (commodities or services).
So, in order for trading to take place there must be an exchange (activity) between buyer and seller (parties) and a product they are exchanging. Goods and services being traded are Commodities, Stocks Currency Shares
Trading is a very important activity in an economy, and is one of the greatest determinant of the economy growth of a country. It is the means through which products or services leave the producer or service provider to the final consumer called the buyer. So trading is a medium of exchange of goods or services.
What is Crypto currency. Crypto currency in the layman language is a digital currency that can be used to buy goods or services both offline and online but it uses an online register. In recent years, crypto currency is being traded to make profit or loss.
Cryptocurrency market. Cryptocurrency markets is a place physical or virtual
where cryptocurrencies are being traded for a profit or loss. According to
coinmarketcap.com, there are over 10,000 cryptocurrencies being traded as of
today.
In the cryptocurrency market, a trader can buy a coin at $10 today and sell it
tomorrow for $50 making a 500% profit, and a trader might still invest $10 and
loss it all tomorrow. The cryptocurrency market is very volatile.
In order to trade successfully in a crypto currency market, traders are expected
to study and use sophisticated tools. This tools will be discussed below.
Define and explain what are the tools used for trading (Technical Analysis
and Fundamental Analysis) and at least one example of each. (A screenshot
is required).
As earlier stated, the cryptocurrency world is very profitable and very volatile place. It has potential for huge gains as well as huge losses. This has made it emperical for cryptocurrency traders in the market to study tools that can help in mitigatting the risk involve considering the fact that every one enters the market
for profits. There are two tools that are being used in predicting price moving in the
crypto market that is Technical Analysis and Fundamental analysis.
Technical analysis.
Technical analysis is the statistical use of real-world data to try and predict the movement of prices. That is, the act of “LOOKING BACK TO PREDICT THE FUTURE”. In technical analysis, traders study past trends of price movement
and determine what happened with price at each level and predict what will happen to price at that level in future. It is one of the most impotant tool in cryptotrading.
Technical analysis uses analytical methods like Candle stick, charts patterns, resistance just to name a few. This different methods gives information about various entry point into the market.Examples
Fundamental analysis.
Fundamental analysis on the otherhand is the looking at information related to the finacial assets. This analytical tool tends to look at the intrinsic value of an asset or a coin. Macroeconomic factors like economic news, statement of accounts, political stabiity, economic investors/ company are the main determinants thatare used here. A good is the movement in the prices of BTC over the tweets and interview of Elon musk in the year 2021. His statement had great impact on the price movement of BTC.
The image below shows the new on Tron. This is a fundamental factor that can Influence the prices of Tron in future.
Name at least 3 cryptocurrency exchanges with the highest trading volume where we can buy our first cryptocurrencies and explain in your words the ways to buy cryptocurrencies on at least one of these platforms (Do not use
Binance).
There are 380 crypto exchanges on coinmarketcap.com. These exchanges are listed
according to their volume in the crypto market. My chosen three crypto exchange platform as per the coinmarketap.com are as follows
- Huobi Global
- Coinbase exchange
- Poloniex
For the sake of demonstration, I have chosen Poloniex to explain how we can buy our first cryptocurrency. I choose this exchange because it is the exchange that is mostly being used to
exchange steem in the cryptocurrency world. I will explain below with the help of screenshots how we can buy our first coin using Poloniex.
Firstly, we go to coinmarketcap.com and click on Exchange at the top left corner.
It will take us to a new page where different exchange platforms are listed. (Note should be taken that I am using a phone, so it navigates me directly to the various platform).
Poloniex is listed number 12 on the list of other exchange. We click on it and it takes us new page where the link to Poloniex platform, we can either copy it and open another page and paste or we can click on the link and it takes on directly to the platform.
The next thing to do is to login, I did not have an account so I had to create an account for myself which I did. After logging in I click on EXPLORE, then I click on Fait to buy coin.
After filling in the necessary information you click on buy. But I ended at this level since I wasn't looking to buy a coin
Conclusion.
From the above it can be seen that cryptocurrency is actually the exchange medium of the future and so it is very important to understand how this work. From the lectures of professor @lenonmc21 I got to create my account at Poloniex. I am very grateful for the lectures and assignment.